Whether it is your first time getting a salary or you’ve been at this pay cheque thing for a while, what you need to do is learn how to master your finances. Because there’s no better feeling in the world than being financially sound.
With the year coming to an end, why not make financial wisdom part of your goals for 2020? Plus, getting smart about your money is actually a no brainer. All you have to do is wise up with these money tricks.
#1 Automate your finances
You can do this easily with online banking: Set up a direct debit to pay for things like your car and rent as well as to a special savings account. This way, you will never forget a payment again, and you won’t be tempted to use your money for something else instead of saving it. Because it is automated, the money goes in directly from your pay cheque to these accounts each month and before you know it, your savings account has a healthy amount in it without you even doing anything.
#2 Stop spending on small, daily purchases
Like the coffee you get every morning, which costs you RM10 at least. Financial experts call this The Latte Factor where if you save that RM10, you end up saving quite a bit of money over time – like RM50 a week, RM200 a month, and eventually RM2,400 a year! This money can be put to work instead like investment which can yield quite a far bit after a few years. For example, if you invested RM150 a month and earned 10% annual return, you’ll end up with RM948,611 in 40 years! Moral of the story? Every little bit adds up – whether you're spending or saving – so you might as well as be saving!
#3 Minimise your credit card use
It’s money you don’t see hence you don’t feel the heartache using it... until you get your credit card bill at the end of the month. If you find yourself always overspending by month end, do this to break out of this financial woe: Use cash. The logic behind this is that you will be more conscious of your spending when you see your cash dwindling and therefore be less likely to spend. Take out a certain amount of cash to spend for the month. Use that and make sure it will last till the end of the month. No more credit card debts.
#4 Save 20%, Spend 30%
After paying off all your bills and fixed expenses, here’s what you need to do ASAP: Take 20% from the remaining fund and use it for your emergency fund, savings and retirement. Then from what’s left, use 30% of it for whatever that makes you happy – going for movies, restaurants, books. After all, you worked for it!
#5 Have one big money goal... and a few small money goals
If all your financial goals are big-ticketed items (like buying a house, saving up to get a BMW, going for a month holiday in Europe), it’s going to be hard to make it happen. That’s because the farther away a goal seems, the less sure you are that you can make it happen, according to a study. To do this right, plan to have one big goal (buy a house) and a few short-term goals that are easier to achieve and therefore quicker to see results... like saving money each week to go on a short trip to Bangkok in six months.
#6 Buy things at the end of the year
Now’s a good time to go shopping for the things you really want because a lot of them are on discount! Retailers want to get rid of stock towards the end of the year hence the promotions and sales that happen around this time of the year. Even big items go on sale too like cars, electrical and household items. So do your shopping now and save more.